Unsure what an Integrated Delivery Model for NZ’s state highway road maintenance network might look like? Check out the latest explainer from CCNZ Technical Manager Michelle Farrell, below!
Seventeen new road maintenance contracts around the country will be tendered in early 2025. The plan is for tenders to be released in February, with a closing date in May. These new contracts – referred to as Integrated Delivery Contracts (IDCs) – could be in place for up to 10 years.
So, first of all, why would NZTA want to tender all of these 10-year road maintenance contracts in one go? The reasoning behind this decision is to provide certainty of a pipeline of work, enabling companies to plan where to allocate resources and training.
While it might not appear to support inclusion of smaller players into the market, it takes a wider view of the supply chain while providing certainty to the market.
That leads to the next piece of the puzzle – ‘contestable work’ and the ‘Directory.’
What is contestable work?
"Contestable work" refers to tasks that can be competed for by different companies other than the incumbent IDC supplier. This ensures that no single company has control of all the work, allowing others to bid to offer the same service, often to try to do it better or at a lower cost.
The graph below shows how NZTA plans to treat different portions of the work from 2025 onwards. A large portion of maintenance work is core IDC scope activities – the bread and butter for the main contractor awarded one of the 17 new IDCs.
The top portion is packages of work made contestable through the Directory.
This leaves the two portions of “potentially contestable work,” which could include pavement rehabs and/or renewals, pavement marking, and/or environmental (drainage) renewals.
How will the ‘potentially contestable’ work be allocated?
The IDC holder will be allocated the majority of ‘potentially contestable’ work at the start of the contract tenure. However, a percentage of this work will be held ‘at risk’ based on performance. If the IDC holder underperforms, the ‘at risk’ component will be made available to the Directory. Conversely, if the IDC holder demonstrates outstanding performance, some of this contestable work may be directly awarded to them.
Subcontracting requirements
The IDC contracts will also retain a requirement that a portion of the work be subcontracted. This requirement is applicable across all work undertaken by the IDC supplier, even though it is not explicitly referenced in the graphs.
Will the IDC holder be able to bid for Directory work?
This is yet to be finalised and may vary by region, depending on the strategic direction NZTA wishes to take and the availability of resources within each region.
What about core work?
Core work includes everything you would expect from a standard road maintenance contract, including cyclic activities, incident response, reactive maintenance and renewals.
The distinction between core work and contestable work will change over time based on government priorities, reflected in Government Policy Statements and the National Land Transport Programme. Contestable work is essentially work activities with programmes that are larger than what the IDC holders, as a collective, can deliver.
What does ‘integrated delivery’ mean?
Integrated delivery implies closer collaboration among various stakeholders – almost working shoulder-to-shoulder. However, NZTA has emphasised its intention to provide firmer direction in strategic asset management, such as deciding what work needs to be done on the network and when. The delivery of work, however, will be more collaborative, involving NZTA and contractors working together to optimise programmes and ensure efficient, effective delivery.
NZTA will lead programme management to align and sequence all activities – whether undertaken by the IDC supplier, Directory suppliers, third parties, or capital projects. This approach aims to optimise network use and minimise customer impact.
In summary, NZTA’s 2025 procurement framework represents a significant shift towards collaboration and performance-based outcomes, with clear roles for both core and contestable work. This framework seeks to balance efficiency, innovation, and effective delivery while maintaining flexibility to adapt to regional needs and contractor performance.